Air France: Internet Advertising and The 'Search' For Answers

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Air France: Internet Advertising and The 'Search' For Answers

  1. 1. Air France: Internet Advertising and The ‘Search’ For Answers
  2. 2. Objectives • Determine if Air France needs a uniform or tailored strategy for search engines • Evaluate search engine KPIs, bid strategy, keywords and groups • What will increase ticket sales and improve ROA? • Which search engine delivered the most value to Air France? • Potential future strategies Media Contacts should consider for increasing AF’s market share and profitability in the U.S.
  3. 3. Background • Born from merger of 5 French transport companies, 1933 • Paris to New York route inaugurated, July 1946 • Listed on the Paris Stock Exchange, February 1999 • Merger with KLM to become largest European air transport group, 2003-2004
  4. 4. Strategies • Target international passengers with the concept of “One Group, Two Airlines” • Strategic Growth through fleet management • “Rationalization” - similar aircrafts for easier training and maintenance • ”Flexibility” – utilizing “progressive operating leases” to receive new aircraft and retire old aircraft as fluctuating demand necessitated • The strategies were very instrumental in bringing positive financial results from 1999 to 2007 Planning international growth strategy and looking to increase their share in the U.S. air travel market, 2007
  5. 5. Airline Industry • New Trends, 2006 Profitability within $500 million of break-even International travel became the fastest growing market 7.4% growth in economy tickets (+4.3% premium) • E-commerce Uniquely suited to direct online sales Intangibility of travel as a product
  6. 6. Landscape 150 • 64% of U.S. households have broadband 112.5 • Media Contacts had a partnership with Double Click (later acquired by Google) 75 Broadband Households Total US Households 37.5 (in millions) 0 2000 2002 2004 2006 2008 2010
  7. 7. The Expanding Internet • A new medium that unified all the things traditional outlets did singularly  • The internet turned the advertising world upside down • 3 distinct advantages • Leveled the playing field • Reach • 2-Way Communication
  8. 8. Competition
  9. 9. International Travel 2006 Scheduled Travelers 41 50 38 30 37.5 29 (in millions) 22 25 22 21 12.5 Ryanair Lufthansa Air France British Airways 0 KLM Easyjet American Airlines
  10. 10. 2006 Total Scheduled Passengers (in millions) 0 25 50 75 100 American 100 Southwest Delta 96 United 71 Northwest 69 Lufthansa 54 Air France 51 49
  11. 11. Scheduled Passenger Revenue by Destination 13% 28% Caribbean and Indian Ocean North America 7% South America Asia Africa and Middle East 14% 16% Europe France 7% 15%
  12. 12. Key Players and Rankings • Media Contacts needed to determine who was going to help increase ticket sales and improve ROA • Rank each Search Engine and determine the leaders in: Brand Awareness (Impressions and Clicks ) Conversion Rate (Purchase) Revenue per booking Volume of bookings Net Profit Per Order Net Revenue
  13. 13. Keywords and Improvement • Google is the premium player, high costs but those can be managed • Careful keyword selections, bid strategy, and positioning • Indexing is critical and keywords are a major ingredient • Utilize additional metrics: impressions and conversion rates
  14. 14. Publisher Comparison - Summary Average Average Total Revenue Sum of Publisher Sum of Net Cost Per Volume of Per Probability Click Cost/ Name Revenue Click Bookings Booking ROA of Booking Charges Booking Google - US $1,391,841 $1.84 1550 $1,126 394% 0.04% $353,641 $228.16 MSN - US $165,451 $1.49 140 $1,297 1,028% 0.08% $16,098 $114.99 Overture - $205,457 $1.19 289 $1,202 145% 0.00% $141,976 $491.27 US Yahoo - US $836,091 $1.01 662 $1,333 1,810% 0.07% $46,198 $69.79 Grand $3,906,597 $1.47 3939 $1,184 517% 0.01% $755,316 $191.75 Total
  15. 15. Metasearch • Kayak is a must • People look for bargain niche sites (Orbitz, Travelocity) • Not using metasearch engine utilization is like watching a foreign film without subtitles • Website indexes are connected to SEs and read via the HTML code • Utilize sponsored links, cookies, and additional advertising on Kayak as real estate is available
  16. 16. Sponsored Links - Air France Search Total Total Net Clicks Media Cost Avg Ticket Engine Booking Revenue Revenue Kayak 2,839 $3567 208 $1124 $233,694 $230,127
  17. 17. Making The Cut Overture - US Grand Total Sum of Impressions 3855689 170120 17062488 933345 22021642 Sum of Clicks 192109 10808 119323 45598 367838 % Impression 17.51% 0.77% 77.48% 4.24% 100.00% Average of Trans. Conv. % 41.48% 73.15% 9.49% 182.88% 62.19% Average of Avg. Revenue per Booking $909 $941 $1,132 $1,273 $1,012 Total Volume of Bookings 1550 140 289 662 2641 Sum of Net Revenue $1,391,841 $165,451 $205,457 $836,091 $2,598,841 Sum of Total Costs $353,641 $16,098 $141,976 $46,198 $557,913 Total ROI 393.58% 1,027.74% 144.71% 1,809.81% 3,375.84%
  18. 18. Objectives • Determine if Air France needs a uniform or tailored strategy for search engines • Evaluate search engine KPIs, bid strategy, keywords and groups • What will increase ticket sales and improve ROA? • Which search engine delivered the most value to Air France? • Potential future strategies Media Contacts should consider for increasing AF’s market share and profitability in the U.S. “(SEO/SEM) is really about getting the right ad to the right person at the right time and having them click on it.” Google CEO E. Schmidt
  19. 19. Conclusion • Must continue to use Google,Yahoo and MSN for unique SEO / SEM campaigns • Need a customized approach for each tool • Each has a distinct search format, different CPC rates, and booking probability • Demographics and reach are separate as well “...the internet had the greatest effect on the travel industry, more than other. It changed the way we travel forever.” B. Bearden

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